Would the existing minority shareholders of parent company receive shares when a wholly owned subsidiary is listed through IPO ?
What happens when this wholly owned subsidiary itself is a 50% holding of overall subsidiary ?. (e.g: Parent company A has a wholly owned subsidiary B (whose 50% holding is with A and another 50% with a 3rd party. Company A is listed and is planning to list B and so the question is, Will the minority shareholders of parent company A get B’s stocks when it gets listed ?)
No, the minority shareholders will not get any stocks simply by virtue of listing a subsidiary.
Thanks you. So on listing the subsidiary, all the funds generated will go to parent company and its up to the parent company to decide on how to spend it (investments or dividends etc.,) ?
This is interesting though. I was under the impression that since you hold the stocks of the parent company (you indirectly hold stake in its wholly owned subsidiaries too ?).
Just so that I am clear, listing means making a security tradable on a stock exchange which is governed by rules; its does not mean issue of new stock. However typically listing involves either issue of new shares or sale of existing shares to meet the rules. If it is listing via issue of new shares, the money comes to the listed company (i.e. the subsidiary). If it is listing via sale of existing shares, then those who are selling will get the proceeds.If the parent happens to be a seller, it will get the process by sale of share to the public.
You do but like you said, indirectly.
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Does any kind of benefit accrue to minority shareholders in a parent company in case a subsidiary gets listed.
For example, HDFC bank is a promoter in HDFC Standard Life, which will be listed in a few days.
